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The Mozambican brewing company CDM (Beers of Mozambique) has warning that the plans by the Mozambican Tax Authority (AT) to impose fiscal stamps on beer bottles is more likely to reduce revenue rather than increase it.
Hugo Gomes, of the CDM board of directors, told reporters on Friday that putting fiscal stamps on beer would reduce beer production and sales.
This is because of the sheer speed at which beer is bottled in CDM’s three breweries (in Maputo, Beira and Nampula). Currently 40,000 bottles are produced per hour on a CDM brewery production line, Gomes said. But inserting the fiscal stamp will add a step to the bottling process, and bring production down to 27,000 units an hour, a slowdown of over 32 per cent.
Gomes pointed out that studies on the alcoholic drinks market in Mozambique show that 66 per cent of the drinks sold are untaxed. But that is 66 per cent by value and not by volume, and consists almost exclusively of wines and spirits. For these drinks there is a very strong case for using fiscal stamps. Only five per cent of the untaxed drinks are beer, and this is imported beer.
All the beer commercially brewed in Mozambique comes from CDM and is taxed. Over the past decade the annual taxes paid by CDM have risen from 1.3 billion to six billion meticais. In US dollar terms, this means that every month CDM provides the Mozambican exchequer with about five million dollars.
Gomes added that CDM accounts for 78 per cent of the total revenue from the Specific Consumption Tax (ICE), which is charged on goods deemed luxuries or superfluous.
The revenue from CDM is at risk, if production slows down simply to insert a fiscal stamp on the bottles. Gomes pointed out that, while there are 80 countries that put fiscal stamps on tobacco products and spirits, only four bother to put stamps on beer bottles (and they are all Islamic countries).
Gomes pointed out that CDM is also important to the Mozambican economy in terms of jobs – it employs over 1,000 people directly, and 150,000 indirectly, through the entire chain of beer distribution. CDM also buys goods and services estimated at 83 million dollars a year from around 450 local suppliers.
Among its purchases of raw materials, perhaps the most significant is the 700,000 dollars paid to peasant farmers in the north of the country for cassava, used to brew the cassava-based beer “Impala” in the Nampula brewery.
Initially, it was thought that beer would be exempt from the fiscal stamps. Then the AT decided the stamps would be imposed as from 17 November. Now it has been delayed. No new date has been fixed, and CDM clearly hopes that the AT can be persuaded to drop the plan.
CDM is the Mozambican subsidiary of AB InBev, the world’s largest brewing company, which acquired the previous majority shareholder in CDM, SAB Miller, in October 2016.Source: AIM